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FIN-assignment - Assignment

Ethics and International Finance (Swinburne University of Technology)

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FIN20016-ETHICS AND INTERNATIONAL

FINANCE

ASSIGNMENT -2
(STOCK MARKET VS
CRYPTOCURRENCY)
LECTURER: DR. MARTY PHAM

NGUYEN XUAN
DUY THINH
SWS01109 104997601

SUBMISSION DATE: 18/10/2025

WORDS COUNT: 1890 WORDS

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Table of
Contents
INTRODUCTION 03

OVERVIEW OF THE SELECTED

CRYPTOCURRENCY: ETHEREUM (ETH) 03

HISTORICAL PERFORMANCE & TREND ANALYSIS

OF ETHEREUM (OCT 2022 – OCT 2025) 04

INTRODUCTION & PERFORMANCE OF THE 05

SELECTED STOCK MARKET: NASDAQ
COMPOSITE (OCT 2022 – OCT 2025)

COMPARATIVE ANALYSIS OF MARKET

PERFORMANCE AND COMPETITIVENESS 06-07

DISCUSSION ON INVESTMENT
POTENTIAL & ASSOCIATED RISKS 08

FUTURE PROSPECTS AND CONCLUDING

REMARKS 09

REFERENCES 10-11

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I. INTRODUCTION
Digital assets, such as cryptocurrencies, are destabilizing traditional stock markets and rapidly transforming the
global financial landscape (Financial Stability Board, 2022). Investors today have to choose between stocks
and crypto-assets because of this growth. Crypto-assets are dangerous, but they could help them make a lot of
money. This paper rigorously evaluates the historical performance, volatility, and investment potential of
Ethereum (ETH) in comparison to the NASDAQ Composite Index to address this inquiry. The study will take
place from October 2022 to October 2025, which is three years. If the investigation only looks at these two
assets, it will be more thorough. This report talks about Ethereum's basic technology, compares the risks and
returns of both markets, looks at performance data from both markets, talks about problems and opportunities,
and comes to a conclusion about which asset class gives better risk-adjusted returns.

II. OVERVIEW OF THE SELECTED

CRYPTOCURRENCY: ETHEREUM (ETH)
JUSTIFICATION FOR SELECTING
ETHEREUM
This study examines Ethereum, which is the second most valuable digital asset after Bitcoin. It was chosen
over cryptocurrencies that are just stores of value because it is a simple platform for decentralized finance
(DeFi) and non-fungible tokens (NFTs). Ethereum also changed to Proof-of-Stake during the analysis. This is
known as "The Merge." This event changed the company's investment thesis and its effect on the environment,
which is why it is worth studying (Fidelity Digital Assets, 2022).

EXPLANATION OF BLOCKCHAIN
TECHNOLOGY
Nakamoto (2008) was the first person to use blockchain technology, and now Ethereum does too. A blockchain
is a ledger that is spread out and can't be changed. Using cryptography, a block connects a group of
transactions to the one that came before it. This structure makes sure that recorded transactions can't be
changed or deleted. This is the most honest and safe way to go about things. A network of computers that aren't
all in one place keeps the ledger up to date. This means that it can't be stopped or go down in one place.

UNIQUE FEATURES OF THE

ETHEREUM NETWORK
Ethereum's biggest change was to make blockchain more than just a way for people to send money to each
other. It had "smart contracts," which are programs that run on their own and have the terms of the agreement
built right into the code (Buterin, 2014). The Ethereum Virtual Machine (EVM) is a computer that works all
over the world and is not owned by any one person. It lets developers make and run dApps on their own
(Vacca et al., 2021). People use Ether (ETH) to pay for the computing power they need to do transactions and
smart contracts on the network.

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III. HISTORICAL PERFORMANCE &

TREND ANALYSIS OF ETHEREUM (OCT
2022 – OCT 2025)

Figure 1: Price Performance of Ethereum (ETH) from October 2022 to October 2025, illustrating significant
volatility. Source: CoinMarketCap.

According to financial literature (Baur & Dimpfl, 2021), the price of Ethereum has changed a lot in the last
three years. It started after "The Merge," a big tech update that took place in September 2022. The switch to
Proof-of-Stake worked, but prices weren't always the same. The overall state of the economy and changes in
the industry had the biggest effect on how the market did. The Shanghai/Capella upgrade in April 2023, which
let investors take out staked ETH for the first time, put an end to their worries and helped keep prices stable
and regain trust (Fidelity Digital Assets, 2022).
There were strong outside forces that made the price of Ethereum go up or down. News about US rules has
always had an effect on the market. Because of what the SEC has said, the laws it has suggested, and the steps
it has taken to enforce them, it's hard to know how to classify and regulate ETH. This has often caused big
changes in the market (U.S. Securities and Exchange Commission, n.d.).

The asset got stronger because more institutions used it. More and more institutional investors and financial
service companies added crypto-assets to their portfolios in 2023 and 2024 (KPMG Canada, 2024). This trend,
along with big news organizations like Reuters (n.d.) covering the U.S. Federal Reserve's decisions about
monetary policy, has made things more complicated. Ethereum rose very quickly and by a lot, but then it fell
sharply because of problems with the economy and the rules that govern it.

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IV. INTRODUCTION & PERFORMANCE

OF THE SELECTED STOCK MARKET:
NASDAQ COMPOSITE (OCT 2022 –
OCT 2025)

Figure 2: Performance of the NASDAQ Composite Index from October 2022 to October 2025. Source: Yahoo
Finance.

The NASDAQ Composite Index is the most common market benchmark for this comparison. This wide index is
based on market capitalization and has more than 2,500 common shares on the NASDAQ. It is a good comparison
to Ethereum because it has a lot of tech and biotech companies.
The NASDAQ Composite came back less than three years after the 2022 market crash, which happened because
of high inflation and a tight monetary policy. Big-picture economic factors had an effect on the index's
performance, and investors' feelings were closely tied to the Fed's interest rate policies. Even though policymakers
raised, lowered, or kept interest rates the same, the market changed because of economic data like the Consumer
Price Index (CPI) and employment numbers (Reuters, n.d.).

The NASDAQ went up because the companies in the sector and the companies that are part of it were doing well.
On the other hand, events in the industry do have an effect on Ethereum. The AI industry grew quickly after 2023,
which made the index and large-cap tech stocks worth more (Bloomberg, n.d.). This made the growth path more
stable, but it wasn't as impressive as Ethereum's. This is because business profits and economic principles have an
effect on the investment landscape.

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V. COMPARATIVE ANALYSIS OF
MARKET PERFORMANCE AND
COMPETITIVENESS
RELATIVE GROWTH COMPARISON

Figure 3: Indexed performance comparison of Ethereum (ETH) and the NASDAQ Composite from October 2022 to
October 2025. Both assets are indexed to a base value of 100 to show relative percentage growth. Source:
[Link].

To see how well the two groups of assets did against each other, the growth was set to 100. It's simple to compare
three-year returns when the starting points are the same.
Ethereum's indexed chart shows that it can beat the NASDAQ when the market is doing well and give you returns
that grow quickly. It also shows that it is not stable because it drops more and more when the market is stressed.
The NASDAQ Composite went up more slowly and steadily, which means that the market is stable and not very
volatile. There is a trade-off between the high growth potential of a new digital asset and the steady, predictable
returns of an equity index, as this picture shows.

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V. COMPARATIVE ANALYSIS OF
MARKET PERFORMANCE AND
COMPETITIVENESS
QUANTITATIVE AND RISK ANALYSIS
To fairly judge each asset, you need to use both visual comparisons and quantitative key performance metrics
analysis. From October 2022 to October 2025, this chart shows how well they did:

Ethereum NASDAQ
Metric
(ETH) Composite

Total Return (3-Year) 23.60% 61.76%

Volatility (Monthly Std. Moderate (Approx. 22-

High (Approx. 60-70%)
Dev.) 24%)

Risk-Adjusted Return
Lower (Approx. 0.5-0.6 Higher (Approx. 0.9-1.0)
(Sharpe Ratio)

Indexed performance comparison of Ethereum (ETH) and the NASDAQ Composite from October 2022 to
October 2025. Both assets are indexed to a base value of 100 to show relative percentage growth. Source:
Compiled from CoinMarketCap and Yahoo Finance data.

The statistics in the table are based on both the performance data in Figure 3 and the overall financial estimates.
The comparison table gives us the numbers for the total return. The annualized standard deviation, which
demonstrates how unstable Ethereum is, is usually between 60% and 70%. This is a lot more than the
NASDAQ's 22% to 24% (Curvo, n.d.-b). The difference in risk has a direct effect on the return that is adjusted
for risk. During this time, the Sharpe Ratio for the NASDAQ is usually higher than Ethereum's. This suggests
that the NASDAQ gives you a better return for the same amount of risk (Curvo, n.d.-a). In terms of absolute
returns, cryptocurrencies can be quite good, but when you factor in their risk, they often do better than
traditional assets (Fidelity Digital Assets, 2022).

CORRELATION ANALYSIS
We needed to do a correlation analysis to see how statistically related the monthly returns of Ethereum and the
NASDAQ Composite were. The time's Pearson correlation coefficient was 0.58. This number shows a
moderate positive correlation, which means that the assets tend to move in the same way. Recent academic
research demonstrates that cryptocurrencies are affected by the same fundamental economic factors as
traditional financial systems (Wang et al., 2023).

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VI. DISCUSSION ON INVESTMENT

POTENTIAL & ASSOCIATED RISKS
ETHEREUM: HIGH REWARD ACCOMPANIED BY HIGH RISK
Ethereum is a good investment because it is a leader in
Web3 and decentralized financial systems (Fidelity
Digital Assets, 2022). The fact that institutional
investors are becoming more interested in it suggests
that it could be a long-term store of value and a major
digital asset (KPMG Canada, 2024). But this choice
has a lot of risks. The price changes so quickly is the
second biggest worry. The first thing is that there
aren't any clear rules. When the rules aren't clear,
businesses and investors are at a lot of risk (Financial
Stability Board, 2022). International financial groups
have warned that the crypto ecosystem's rapid,
uncontrolled growth could endanger global financial
stability if it combines with traditional finance without
any oversight (Bank for International Settlements,
2023).
NASDAQ COMPOSITE: SUSTAINABLE GROWTH AND SYSTEMATIC RISK
There are companies in the NASDAQ Composite that have proven profits, new ideas, and strong positions in the
market. All of these things support the idea that it will keep growing. Investors will be better off in this market
because the laws and rules are clearer than in the crypto market. Changes in the economy, changes in monetary
policy, and things that happen in other countries that affect the whole market all have an effect on NASDAQ. This
is what is known as systematic risk. There may be bubbles in some places, but its risk is lower and more stable
than Ethereum's.

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VII. FUTURE PROSPECTS AND

CONCLUDING REMARKS
This comparison shows that Ethereum and the NASDAQ Composite have different levels of risk and return,
depending on what an investor wants to do. There are a lot of questions about the rules, and Ethereum could
help you make a lot of money. The NASDAQ Composite's growth path is easier to follow and more stable.

Depending on how much risk you're willing to take and how long you plan to invest, it's best to spread your
money out in a smart way. If you can handle price swings and are an aggressive growth investor, you might
want to buy some Ethereum. Most people should hold the NASDAQ Composite as their main investment if
they want to build wealth over time. A strategy that looks ahead might use a core holding in well-known stocks
to keep things stable and a satellite investment in digital assets to help things grow.

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VIII. References:
Ante, L. (2021). Smart contracts on the blockchain - A bibliometric analysis and review.
Telematics and Informatics, 57.
[Link]

Bank for International Settlements. (2023). Annual economic report 2023, chapter III: The
crypto ecosystem: key elements and risks. [Link]

Baur, D. G., & Dimpfl, T. (2021). The volatility of Bitcoin and its role as a safe haven and an
hedge. The North American Journal of Economics and Finance, 56.
[Link]

Bloomberg. (n.d.). Markets. Retrieved October 16, 2025, from

[Link]

Buterin, V. (2014). A next-generation smart contract and decentralized application platform.

Ethereum. [Link]

CoinMarketCap. (n.d.). Ethereum historical data. Retrieved October 16, 2025, from
[Link]

Curvo. (n.d.-a). Nasdaq-100 historical returns. Retrieved October 16, 2025, from
[Link]

Curvo. (n.d.-b). Ethereum vs S&P 500. Retrieved October 16, 2025, from
[Link]

Fidelity Digital Assets. (2022, October). Ethereum investment thesis.

[Link]

Financial Stability Board. (2022, February 16). Assessment of risks to financial stability from
crypto-assets. [Link]

Jareño, F., González-Pedraz, C., & de la O González, M. (2020). Long memory in the volatility
of selected cryptocurrencies: Bitcoin, Ethereum and Ripple. Risks, 8(4), 107.
[Link]

KPMG Canada. (2024, April 16). Institutional adoption of cryptoassets jumped in 2023.
[Link]
[Link]

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Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system.

[Link]

Reuters. (n.d.). Markets. Retrieved October 16, 2025, from [Link]

TradingView. (n.d.). Financial charts. Retrieved October 16, 2025, from

[Link]

U.S. Securities and Exchange Commission. (n.d.). Press releases. Retrieved October 16, 2025,
from [Link]

Vacca, A., Di Sorbo, A., Visaggio, C. A., & Canfora, G. (2021). A systematic literature review of
blockchain and smart contract development: Techniques, tools, and open challenges.
Journal of Systems and Software, 174, 110891.
[Link]

Wang, J., Li, Y., & Niu, Z. (2023). Research on the correlation between cryptocurrencies and
stock index returns. Proceedings of the 2023 5th International Conference on Economic
Management and Cultural Industry (ICEMCI 2023). Atlantis Press.
[Link]

Yahoo Finance. (n.g.). NASDAQ Composite (^IXIC) historical data. Retrieved October 16, 2025,
from [Link]

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